Fidelity Auto Roll Service

Frequently Asked Questions

• How does the alerts feature work?

  Fidelity, through the Alerts Service, will generate a series of Auto Roll alerts notifying you that a maturity date is approaching, identifying a Reinvestment Position(the CD which will be purchased using the proceeds of your maturing principal), and notifying you in the event the Auto Roll Service is unable to identify a Reinvestment Position. If you unsubscribe from the Alerts Service on 1 or more accounts, your authorized instructions will be revoked and the Auto Roll Service will be canceled on all positions for the selected accounts.

  Instructions on how to cancel your participation in the Auto Roll Service are included with every alert. To ensure you receive our correspondence, please be sure to provide us with an accurate email address for your account.

  The following alerts will be sent to you as part of the Auto Roll Service:

  Welcome alert – Sent at the time of enrollment, this alert welcomes you to the service and identifies the enrolled position.

  Maturing position alert – Provides you with details of the position to be purchased by the Auto Roll Service with the proceeds of the position that is about to mature within the time frame referenced.

  Reminder alert – Sent approximately 1 month before a position's maturity to remind you of your participation in the Auto Roll Service. This alert is only sent if the term to maturity is 13 months or greater.

  No position identified alert – Notifies you that Fidelity has been unable to find a replacement Auto Roll position meeting the correct size, term to maturity, coupon frequency criteria, and/or that a Treasury auction has an expected yield below zero on the day of the auction. For Treasury auctions with a negative expected yield, the alert will be sent on the day of the auction. An alert will also be sent two days before maturity if a replacement position has not been found.

• What happens when the Expected Yield for a Treasury Auction is below zero?

  Fidelity monitors the "Expected Yield" (found on the New Issues Auction Results page on Fidelity.com) for each Bill or Note to be auctioned prior to its auction date. Bills or Notes identified as a Reinvestment Position must display a positive Expected Yield during the Open Order period at 8 a.m. ET in order for the Auto Roll Service to trigger a new order. If the Expected Yield is less than 0% each morning at 8 a.m. ET during the Open Order period, Fidelity will not process the Reinvestment Position generated by the Auto Roll Service. As a result, funds that would have otherwise been used to purchase the Reinvestment Position will remain in your core account. Should this occur, you will be notified through the Alert Service shortly after 8 a.m. ET on the day of the auction, so you have time to place a new order for the Treasury Auction should you choose to.

• What are the risks?

  Default risk – While your entire U.S. Treasury purchase is backed by the full faith and credit of the U.S. government, the FDIC protection of CDs is subject to FDIC limits. For more information, visit FDIC.

  Bank failure risk – If the bank from which you purchased your CD fails, your principal and accrued interest, along with other eligible assets you hold at that bank, are protected up to FDIC coverage limits, although you may face a wait to receive your money.

  Credit risk – Since Treasurys and CDs are debt instruments, credit risk is associated with their purchase. For CDs, FDIC insurance may help mitigate this risk. However, Fidelity makes no judgment as to the creditworthiness of the issuing institution and does not endorse or recommend the CDs in any way. Visit FDIC to learn more about FDIC insurance coverage and the availability of bank rating services.

  Interest rate risk – Because purchases through the Auto Roll Service take place as Treasury securities and CDs mature, these purchases will reflect prevailing interest rates at the time of maturity. These rates may be lower or higher than those of your original position purchase.

  Negative Yield risk – Purchasing a negative yielding investment could result in a loss of principal.

  General liquidity risk – The secondary market for CDs is generally illiquid in nature. This can impact your ability to sell your CDs as well as the price received for that sale.

  Selling prior to maturity – Treasuries and CDs sold prior to maturity (as opposed to allowing the positions to mature according to the schedule) are subject to a trading mark-down, and may result in a substantial gain or loss due to interest rate changes and other factors.

  Inflation risk – The yield-to-call or to maturity may not provide a positive return over the rate of inflation for the period of the investment.

• How do I withdraw from the Auto Roll Service or cancel a purchase?

  Once you enroll, repurchases take place automatically when a Treasury or CD matures. You have the option to withdraw from the service, cancel the Auto Roll feature on a specific position or CD Ladder, or to cancel the purchase of a specific position.

• How do I withdraw from the Auto Roll Service and cancel all Auto Roll positions at one time?

  You can cancel the Auto Roll Service at any time. If you only wish to cancel the Auto Roll Service and revoke your authorized instructions, you may do so either at the position, ladder, or at the account level. To cancel the Auto Roll Service from a particular position, view the existing position within your Account’s Positions page, select the row to view additional details and select the Cancel Auto Roll button. If the existing position is close to maturity and has already triggered an order for a Reinvestment Position, you will be instructed to cancel the pending order from the Orders page on Fidelity.com. To cancel the Auto Roll Service for all positions within an account, you may unsubscribe from the Alerts Service for that account. Additionally, owners of a CD Ladder with the Auto Roll Service enabled may cancel the Auto Roll Service by making the appropriate selection from the Purchased Ladders list. This list may be accessed from the Bond Ladder ToolLog In Required page. The Auto Roll Service will continue until you affirmatively cancel the Auto Roll Service.

• How do I cancel the Auto Roll feature for a specific position?

  You can cancel the Auto Roll feature for a specific position by viewing the existing position within your Account's Positions page, then selecting the row to view additional details and selecting the Cancel Auto Roll button.

• How do I cancel a purchase of a specific position?

  This can be done in two different ways.

  • You can cancel the purchase of a specific position by using the Cancel option when you receive your Maturing Position Alert from Fidelity. By using the Cancel option, you will be taken to the Open Order page where you can cancel the purchase.
  • You can call a Fidelity representative at 800-544-5372 and provide the CUSIP number of the Auto Roll position for which you would like to cancel the purchase.

  After you receive a Maturing Position Alert, you have a limited time to cancel the purchase of a specific security. For Treasuries, you can cancel the purchase up until the end of the day prior to auction date. For CDs, you have both the day of the alert transmission and the following day to consider the purchase of this selected position or to cancel the purchase.

  In some circumstances, a CD might post to the account within the purchase/cancel consideration period. In these cases, Fidelity will honor the cancellation request if you contact a Fidelity representative at 800-544-5372 and make such a request within the time limitation outlined above.

• What is Fidelity's detailed methodology for Treasury auctions and new-issue CDs?

  For Treasury auction positions, the U.S. Department of the Treasury currently offers the following durations that Fidelity makes Auto Roll eligible: 4-, 8-, 13-, 17-, 26-, and 52-week T-bills as well as 2-, 3-, and 5-year notes. For Treasury Auction Auto Roll purchases, Fidelity applies the same face value and same term to maturity as the initial position. Only the maturing principal will be applied to any subsequent Auto Roll position purchase. No interest payments from these positions will be included in any Auto Roll position purchase. For example, if you initially purchases a $10,000 face value 2-year Treasury note, when that note matures, the maturing principal of $10,000 that would normally post to the account will be eligible to be rolled into the upcoming 2-year Treasury auction.

  All interest payments from the initial position purchase will post to the account and will not be included in the subsequent Auto Roll position purchase. Any interest payments from future Auto Roll position purchases will similarly post to the account and will not be included in subsequent Auto Roll purchases.

  Finally, the Auto Roll feature will continue unless a you affirmatively cancel the Auto Roll feature for that position.

  For newly issued FDIC-insured CDs, the purchase will be based upon a series of requirements. The following hierarchy applies to this series of requirements:

  • Same Face Value – Auto Roll CD purchases will always apply the same face value as the initial customer position purchase. As noted above, only the maturing principal will be applied to the subsequent Auto Roll position purchase. No interest payments from these initially purchased positions will be included in any Auto Roll position purchase.
  • Similar Term to Maturity – Any Auto Roll transactions will require the purchase of another CD with a similar term to maturity. For CDs with the Auto Roll Service enabled as part of a CD Ladder strategy, maturing CD positions will be reinvested in new issue CDs with maturities equal to the length of the ladder. For example, in the case of a 5-year CD ladder, each maturing CD will be reinvested in CDs that mature in 5 years.
  • Same Coupon Frequency – In the scenario of a single CD position with Auto Roll Service enabled, the next criterion requires the identification/selection of a CD with the same coupon frequency as the coupon frequency of the original purchase. IMPORTANT: For maturing CDs enrolled as a rung of a CD ladder strategy, the search will not consider the coupon frequency of the Maturing Position and may result in the purchase of a CD with a different interest payment frequency.
  • Yield – For a maturing CD, the Auto Roll Service will search Fidelity inventory for the highest yielding new issue CD meeting your criteria at the time of the search, with a settlement date within twelve calendar days following stated maturity date of the maturing position, and with sufficient quantity available to complete your instructions.
    
    

    For example, if a customer purchases $5,000 face value of a 9-month new issue CD that pays interest monthly, upon maturity of that CD, the Auto Roll methodology will search within Fidelity's available offerings to find another 9-month CD that provides monthly coupon payments. If it identifies 2 CDs matching all of these criteria, an Auto Roll $5,000 purchase of the higher yielding of the 2 will occur at/around maturity of the initial CD purchase.